Can Purpose-Driven Business Fix Broken Capitalism?

Is the daily disorder in our society beginning to feel historical? There is a growing sense that our governing institutions and practices are out of control and beyond our control, and that events are re-shaping life as we know it. Are we at one of those momentous “hinge” moments in history, when the known world dissolves but it’s not yet clear what is to come next?

In recent times, 1968 was such a transformative year, one which set the course for the next 50 years in culture, politics, and economics. It was a year with a raging war in Vietnam, the assassinations of Dr. Martin Luther King and Robert Kennedy, protests and demonstrations for and against a menu of causes, and an economy that was beginning to wobble into unprecedented deficits and growing inflation under the heavy costs of war and ambitious social programs. It culminated in the election of a president who was later forced to resign to avoid impeachment.

1968 also included the rise of Black Power and the beginnings of the feminist movement, the creation of multiple counter cultures, a back-to-the-land movement, the growth of rock music into a powerful force, and a youth-oriented entertainment industry. The consequences of these responses to social and political crises are still being played out today by this generation’s huge cohort of Baby Boomers (some 75 million strong).

1968 set social, political, and economic patterns for 50 years

The parallels with current events in the social, political, and economic spheres are spookily obvious. As Mark Twain said, “history may not repeat itself, but it sure does rhyme.” 1968 was a year that separated the past from the future, sometimes violently, as new solutions to old problems became the default mode of action. For business, the consequences have been—and continue to be—immense.

2018: a year of “creative destruction”

Today, it seems that the fundamental economic model rooted in those revolutionary times is being called into question as never before. Whatever its virtues, business practices and strategies dating back 50 years are clearly inadequate to the demands of the day. Brands are now taking unprecedented stands on key social and political issues, and companies are integrating purpose into their missions and strategies.

The most common question in this era is “What’s next?” Answers are increasingly being formulated through a process of so-called “creative destruction.” Proposals once thought “radical” are attracting significant support. New networks and associations have formed, new ways of doing business are being put into practice, and most importantly, new ideas about a much more expansive view of business are spreading: “Green New Deals,” for example.

When the CEO of the world’s largest investment fund, Larry Fink of BlackRock, calls for companies to have a “social purpose,” you can bet that a paradigm shift is in the making. “Profits are in no way inconsistent with purpose–in fact, profits and purpose are inextricably linked,” says Fink. Financial Times, the voice of the global financial establishment, is chiming in, asking, “Should business put purpose before profit?” And for an affirmative answer, it quotes Oxford’s Colin Mayer who defines corporate purpose as “producing profitable solutions to problems of people and planet.” And Bloomberg News has joined the chorus with an idea-rich position article, “Seven Fixes for American Capitalism: Ideas from the Right, the Left, and Across the Atlantic" to mend what’s broken in our economy. Clearly, a new economic agenda is in the offing.

Business is stepping up to shape the change we need

Business is not waiting for this momentous change to take effect, but is hard at work shaping the change that is needed for future viability.

One substantial forecast comes from CECP: The CEO Force for Good, an organization that “empowers corporations to be a force for good in society.” In a statement titled “How Purpose and Culture are Driving Sustainable, Long-term Growth and Profitability,” CECP CEO Daryl Brewster poses the fundamental issue: “It’s clear that effective companies cannot ignore social needs in pursuit of profit, but how do businesses navigate what’s coming and what role do they play in solving social challenges?”

The answers are outlined in its report, "Measuring the Value of Corporate Philanthropy: Social Impact, Business Benefits, and Investor Return." The details are set up in three buckets, “identifying three vital audiences that companies must engage to measure and communicate business’ social impact: 1) investors, 2) internal, and 3) significant stakeholders.”

CEO leadership is key: “CECP guidance is rooted in issue areas that were identified through investor feedback and a suite of research that provides specific guidance to companies to structure an effective long-term plan, building towards consolidation and comparability. Through these long-term plan presentations, leading CEOs are setting examples for their peer firms to follow.” The focus is on “effective long-term plans that address key issues of long-term value creation, such as overall corporate purpose, strategy, human capital, and corporate governance.”

There’s much more to digest in this ambitious but clear-headed position paper—read the details here.

The good news is that thoughtful people are laying out insightful plans to turn progressive ideas into practical action.

John Howell, Chief of Thought Leadership and Editorial Director, is a co-founder of 3BL Media, the parent company of Triple Pundit, begun in 2009. Howell oversees original editorial content procurement and creation. He is also the author of the weekly Brands Taking Stands Newsletter. He has written and edited for Elle, Artforum, High Times, the New York Times Magazine, and the LA Times. Howell is based in Wonalancet, NH.